Non-Compete Agreements

Non-compete agreements, also called restrictive covenants, are an increasingly common requirement for employment in many sectors. Sometimes non-compete agreements appear as a clause within a contract. Other times, they are separate contracts in and of themselves. Though common, the terms of non-compete agreements vary greatly. When presented with these agreements, many people simply sign and return them to their employers without really understanding exactly what commitment they are making. Only after they leave that position and seek other employment do they realize that they’re in a bind due to restrictions on their ability to work within a certain area, within a certain period of time, and/or within their particular field of work.

Covenants not to compete are permissible under MCL § 445.774a in Michigan and in Florida under sections 542.33 & 542.335, Florida Statutes. However, these non-compete agreements are only enforceable when they are reasonable. Generally, non-compete clauses or agreements place restrictions on a person’s ability to work in three different ways: (1) geographical restrictions, (2) time restrictions, and (3) line of business restrictions. Geographical restrictions sometimes are minimal, restricting a former employee from working for a competitor within a 50-mile radius. Other times, the restrictions can be nationwide or even international in limited cases. Similarly, time restrictions may be short and restrict a former employee from competing within a six-month time frame—or they could restrict one’s employment options for years. Line of business clauses likewise can be narrow or broad.

The best approach when presented with a non-compete agreement or with an employment contract that includes a covenant not to compete is to retain an experienced attorney to review the proposed terms before you sign. Having an attorney review the agreement for you has two potential benefits: (1) your attorney may be able to negotiate more favorable contractual terms for you and (2) your attorney will explain to you exactly what the non-compete clause or agreement requires of you and exactly what kinds of issues you may encounter in the future as the result of agreeing to the covenant not to compete. This will enable you to plan accordingly and make appropriate decisions. Often, the non-compete terms presented to you will be reasonable. In those cases, your attorney can reassure you that your employer is being fair and that you are making a commitment that is reasonable. In other cases, certain terms will be red flags. In those situations, you will have some decisions to make, and your attorney will ensure that you make informed choices at each step of the way.

Many times, however, people realize that they need legal assistance only after they leave their employment and are bound by a non-compete agreement. In these cases, having an experienced attorney is even more important. Your attorney will explain to you what the terms of the non-compete agreement are, whether they are reasonable, and how likely or unlikely it is that a court will enforce those terms. This will allow you to make calculated decisions based upon the risks and benefits associated with various courses of action.

Other times, people seek an attorney because they find themselves facing a lawsuit for breach of a non-compete agreement. In those situations, retaining savvy legal counsel is most critical. Your attorney will explain to you what the claims in the lawsuit are, how strong your defenses are, and the different strategies for approaching litigation. Even at this stage, your attorneys will present you with various options that will allow you to make decisions based upon your individualized situation and needs.

The attorneys at Chapman Law Group have years of experience in reviewing and interpreting non-compete agreements and clauses. We are familiar with the applicable legal standards for determining whether the terms of such covenants are reasonable under state law. In hiring Chapman Law Group to review your non-compete agreement, you can be sure that your attorney will perform a timely and thorough review which considers all of the latest legal developments. You also can be certain your attorney will answer all of your questions and equip you with all of the information you need to handle your unique situation.